Tax - statistical sampling

Introduction

Incoming and outgoing invoices provide important information about the scale of indirect tax risks within a company. By selecting just a limited number of transactions via a statistical sample a quick insight can be gained into the level of tax risks with minimal human effort needed.

The advantages of statistical sampling

Statistical sampling has the added benefit of allowing the determination of the exact amount of a tax assessment. For this reason, the Dutch tax authority considers statistical sampling as their preferred tax audit method. For the tax function, statistical sampling is an efficient and effective way to test the effectiveness of its Tax Control Framework.

The results could also be used to get indirect taxes higher on the priority list, since managing of material risks that are quantified fall within the KPIs of senior management.

Our expertise and approach

In our working method, we use the same parameters as the Dutch tax authority during a tax audit.

Delivery - The client provides data files following the instructions of Phenix Consulting

Sampling - Phenix Consulting conducts the sampling using audit software. The client is instructed to gather the selected (physical) invoices, declarations, receipts or other documents

Assessment - Phenix Consulting evaluates the delivered material and determines the correctness of the VAT entries

Quantify - In case of incorrect VAT entries and errors, we calculate the potential VAT assessment

Via the 'single audit' method, it is possible to extend the scope to other tax areas such as corporate income tax and wage tax.

Our Team

Ferry Geertman (RE, CISA) has a background in Applied Mathematics. Ferry has vast experience in data analytics, including the design and evaluation of statistical samples as part of internal and external audit

Hein Kloosterman (RE RA) used to be the chairman of the IT audit professional practice office and chairman of the statistical knowledge group of the Dutch Tax Authorities. Hein has extensive experience with the so-called integrated audits (single audits). Hein is involved in the education in accountancy, both at Nyenrode and the Erasmus University

Hein and Ferry are both members of the Steering Committee Statistical Auditing. This steering group is connected to the Limperg Institute and aims to promote the proper (effective and efficient) use of statistical methods and techniques in auditing and related audits of financial statements and reports.

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